Chinese ride-hailing behemoth Didi is beta-testing its electric bike rental service in South China, a person with knowledge of the matter told TechNode. Didi is said to have won the initial support of at least three cities.

The firm is expected to develop its own bike rental brand, or potentially a separate app, with an access point from within Didi’s main app. Didi plans to launch the electric bike rental product in at least three cities within future months, the source added.

From four-wheels to two-wheels

Entering the electric bike sector might seem a brand new effort for the ride-hailing firm, but the business logic behind this move can be seen from its recent layouts. As a dominating player in China’s ride-hailing industry, Didi is on the path towards a greater ambition to address every transportation problem, as shown in the term it defining itself: “a world-leading transportation platform.” This positioning put it conveniently in expanding beyond ride-hailing to the sectors that address short distance trips.

Didi’s foray from four-wheel (long distance) to two-wheel (short distance) sector started years back. Through a series of investments starting in September 2016, Didi tied up with ofo and then embedded ofo’s service into its main app in April last year. Just one day ago, Didi announced it is building a bike-rental platform that integrates ofo, Bluegogo and potentially its own-branded shared bikes.

“Compared to bikes that are usually used for 1-3km trips, electric bikes have a mobility radius of 2-8 km, making it a more versatile vehicle for smaller cities and urban districts,” the source noted.

Incumbents galore

In the prime of China’s bike rental boom, electric bike rental also surged, but only as a complementary niche service for a small group who have serious mid-distance travel demands. But as bike rental market reaching saturation and startups scratched for new development directions, the electric bike rental became a convenient extension, where people expect to duplicate the bike rental success.

Smart transportation firm Yongjiu Chuxing (永久出行) have launched a combined 100K e-bikes in Shanghai and Hangzhou since last May. “The war among bike rental firms is entering a vicious circle where competitors are vying for users by providing deposit-free service. In a case like this, companies need product differentiation that can bring revenues. Electric bike, thanks to its capabilities to cover longer-distance trips, can partially replace private cars and metros, and therefore easier to form payment habit among users,” Yongjiu’s CEO Zhou Wenming told local media.

Chances against tightening regulation

However, China tech giants’ path to achieve the grand vision could be bumpy. After a bitter-sweet relationship, Chinese government has shown cautiousness about supporting bike rental. The cautious atitude even affected electric bike rental. The Ministry of Transporation issued a policy in August, making it clear that the government will not support the development of electric bike services. Regional municipalities in Beijing, Shanghai and Tianjin also released similar policies for security and environmental concerns.

But it would be too early to be bearish about the whole prospect of electric bike industry. Observers believe there is a chance of allowing major market players with solid operational record to explore these new businesses. Given the craze of tech giants and government’s “laissez-faire” attitude towards tech innovations, e-bike rental does have a chance to beat the odds.